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Where Reverse Mortgages Fit in Modern Retirement Planning


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Alicia Munnell’s Latest Book Proposes Reasonable Solutions

“The idea that people can retire at 62 and walk around holding hands on the beach is not realistic”

reverse mortgage newsThese words fit the Boston Globe’s description of Munnell as one not to sugarcoat her opinions. Munnell is no newcomer to the American retirement dilemma having served as a top economist at the Federal Reserve Bank of Boston in 1991 after earning her doctorate in economics from Harvard University. She also served as an assistant secretary of the Treasury and a member of the president’s Council of Economic Advisors in the Clinton administration.

“Falling Short: The Coming Retirement Crisis & What To Do About It’ is Munnell’s 23rd published book. In it she outlines the abandonment of traditional pensions by companies toward 401(k) plans. In fact in 1983 nearly two thirds or retired workers enjoyed a traditional pension plan in addition to Social Security. These factors coupled with the projection that Social Security will be unable to meet its obligations in 20 years spell trouble for retirees.

Having earned a reputation as a firebrand who points out inconvenient truth’s her book serves as a warning and a call for Americans to…

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  1. While few will consider what Alicia wrote about reverse mortgages as negative, the book lacks recognition of how reverse mortgages can be used in retirement in ways like those advocated by Barry Sacks, Harold Evensky, John Salter, and Jerry Wagner among others. Few retirement planners would be compelled to include reverse mortgages as a first tier option as a result of what Alicia writes. As to the use of reverse mortgages in retirement her ideas are old and tired. Her presentation of the use of reverse mortgages is what one would expect from those who advocate using reverse mortgages as a loan of last resort with a nod to the idea that taking one early could help seniors in specific situations.

    It is new retirement usage ideas which are vigorously and rigorously tested and vetted that will make reverse mortgages sufficiently attractive to retirement planners to cause them to pick up the phone right away to arrange client meetings with their favorite reverse mortgage originator. If you look at the book from the point of view of a retirement planner, what incentive is there to make the next (or a near term) meeting with a client about obtaining a reverse mortgage unless the clients needs or is near needing a loan of last resort?

    By putting her investment money into the industry it is clear Alicia sees a real future for our industry and supports it. She is a great advocate for the industry but unfortunately her book as to reverse mortgages is somewhat bland when there is no need to be.

    (The opinions expressed in this comment are not necessarily those of RMS or its affiliates.)

  2. Nice piece Shannon. Alicia is well respected and her macro views on retirement are spot on. You did a great job summarizing her position.

    • Thank you Torrey. We are fortunate to have such astute advocates for the reverse mortgage speaking out. Thanks again.

  3. Alicia brings an interesting perceptive to our industry. If Hillary runs and is elected, the country would be helped if Alicia is a significant part of her economic team. She is a great advocate for us.

    Alicia is making a positive difference. While I may not agree with all she says, it is people like Alicia who will bring our industry out of its doldrums and elevate us to the business levels we experienced at our endorsement peaks earlier this century.

    While Fred Thompson has been a positive influence for our industry, particularly AAG, people with other different economic views and perspectives only add credibility to a truly great product.

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